CMS Reexamines Its Interpretation of the COVID-19 Continuous Enrollment Requirement

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The Big Picture

On September 23, the Centers for Medicare & Medicaid Services (CMS) reopened the comment period for a November 2020 interim final rule (IFR) titled “Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency.” Among other elements, this IFR enacted 42 CFR 433.400, which modified CMS’ interpretation of the so-called Medicaid continuous coverage requirement defined under Section 6008 of the Families First Coronavirus Response Act (FFCRA). Section 6008 generally prohibits states from terminating coverage or reducing benefits for any Medicaid beneficiaries during the COVID-19 public health emergency (PHE), subject to narrow exceptions. In 42 CFR 433.400, however, CMS defined certain additional scenarios in which benefits could be reduced.

Although CMS is not at this time formally proposing any changes to the rule, the Federal Register notice reopening the IFR for public comment suggests that CMS is considering repealing Section 433.400 in whole or in part. Comments on the proposed modifications to the IFR are due no later than October 27.

CMS’ Evolving Interpretation of the FFCRA Continuous Coverage Requirement

FFCRA’s Text. Enacted on March 18, 2020, FFCRA Section 6008 offered states a temporary 6.2-percentage-point increase in their federal Medicaid match rate, subject to meeting certain conditions. The continuous coverage requirement in Section 6008(b)(3) requires states to “provide that an individual who is enrolled for benefits” on or after March 18, 2020, “shall be treated as eligible for such benefits through the end of the month in which [the PHE] ends.” FFCRA defines only two exceptions to this requirement: A state need no longer cover benefits for an individual who requests a voluntary termination of eligibility or ceases to be a resident of the state.

CMS’ Original Interpretation of the Continuous Coverage Requirement. In initial guidance on this provision, published in frequently asked questions (FAQs) documents in April, May, and June 2020, CMS interpreted the continuous coverage requirement of the FFCRA as prohibiting states from doing either of the following during the PHE: (1) disenrolling any individual from the Medicaid program or (2) reducing benefits or increasing cost sharing for any enrollee, whether by reducing coverage for all beneficiaries through an amendment to the state plan or waiver or by moving a beneficiary from one enrollment group to another if that second group has lesser benefits or higher cost sharing. (The April 13, 2020 and June 30, 2020 FAQs were incorporated into one comprehensive FAQs document on May 5, 2020, and last updated on January 6, 2021. That FAQ document is available here for additional information.)

The November 2020 IFR and 42 CFR 433.400. On November 6, 2020, CMS issued an IFR that, among other things, defined new exceptions to the continuous coverage requirement. CMS explained that it was enacting these exceptions in 42 CFR 433.400 in response to concerns from states that CMS’ original position contributed to increased costs and diminished program flexibility. While underscoring FFCRA’s requirement to preserve eligibility for all enrollees, the IFR gave states new flexibilities to reduce the scope of covered benefits or increase cost sharing in certain scenarios, including:

  • Programmatic Changes. The IFR effectively exempts programmatic changes to benefits and cost sharing from the scope of FFCRA Section 6008(b)(3). States may, for example, drop coverage for optional benefits or increase cost sharing during the PHE as long as the state complies with all applicable procedural requirements (e.g., seeking CMS approval and providing advance notice to enrollees).
  • Shifting Individuals Between Eligibility Groups Within a “Tier” of Coverage. Whereas CMS originally prohibited states from making any changes that would reduce an individual’s benefits or increase cost sharing during the PHE, the IFR relaxed those parameters by defining broad tiers of coverage and allowing states to move beneficiaries among eligibility groups within the same tier or from a lower tier to a higher tier.1
  • Terminating Individuals Not “Validly Enrolled.” The IFR allows states to terminate individuals from the Medicaid program if they were not in fact eligible at the time of enrollment but were enrolled due to agency error or fraud, subject to the completion of a full redetermination, including advance notice of the termination and the opportunity for a fair hearing.

Reexamining the November 2020 Interpretation

According to the Federal Register notice reopening the comment period, CMS “has become aware that the IFR’s implementation of Section 6008(b)(3) of the FFCRA has negatively affected some Medicaid beneficiaries.” Specifically, the agency has heard concerns about the potential loss of benefits that could be experienced by enrollees who become eligible for a Medicare Savings Program (MSP) eligibility group, under which states cover the cost of Medicare premiums and/or cost sharing but do not provide any “wraparound” coverage for benefits that are not covered under Medicare, such as nonemergency medical transportation and most home- and community-based services.

Notably, in early August, several Medicaid enrollees in Connecticut filed suit challenging the November IFR after experiencing a loss of Medicaid benefits once they were deemed eligible for an MSP. According to the lawsuit, these (and other) provisions in 42 CFR 433.400 are impermissible in light of the broad beneficiary protections defined in FFCRA Section 6008(b)(3).

Acknowledging the adverse impacts of the November 2020 IFR and the evolving nature of both the pandemic and states’ fiscal situations, CMS is now considering “returning to its original interpretation” from the spring of 2020. Specifically, CMS is soliciting comments on whether 42 CFR 433.400 should be rescinded, noting that if CMS does finalize this proposal, “it may require States to offer Medicaid beneficiaries whose coverage was changed in a manner consistent with § 433.400 an opportunity to re-enroll in, or to have their enrollment changed back to, their prior coverage.” If CMS finalizes the proposal, the Connecticut lawsuit would likely be rendered moot.

Comments on the proposed modifications to the IFR are due no later than October 27.

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1 Specifically, the three tiers are (1) coverage that meets the definition of minimum essential coverage (MEC), (2) coverage that is less than MEC but includes COVID‑19 testing and treatment, and (3) coverage that is less than MEC and does not include COVID‑19 testing and treatment.

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